By Julie Gordon and David Ljunggren
OTTAWA (Reuters) -Bank of Canada Senior Deputy Governor Carolyn Rogers said on Wednesday that inflation in Canada was much too high and did not rule out a 75-basis-point increase at the central bank's July decision.
"We know inflation is keeping Canadians up at night. It's keeping us up at night," Rogers said at an event organized by the Globe and Mail newspaper, just hours after official data showed May's inflation rate hit a near 40-year high of 7.7%.
"The balance of risks are very much tilted to the upside on inflation. So right now, the way we're looking at this is, the most important thing is to get inflation back to target," she added.
When asked if that meant a 75-basis-point hike at its next decision due on July 13, Rogers did not rule out the possibility.
"We'll take the July decision when we get to July," she said. "We've been clear all along, the economy is in excess demand, inflation is too high, rates need to go up."
The Canadian dollar was trading 0.1% lower at 1.2930 to the greenback, or 77.34 U.S. cents, recovering some earlier losses.
The Bank of Canada hiked its policy rate to 1.5% from 1.0% earlier this month, its second consecutive oversized increase, and said it would act "more forcefully" if needed to tame price increases.
Money markets see about an 80% chance of a 75-basis point increase in July and economists said May's surprisingly high inflation number made such a move increasingly likely.
The central bank separately said Deputy Governor Timothy Lane would retire on September 16, following the July and September rate decisions. The process to find a replacement will begin immediately, the bank said.
(Reporting by David Ljunggren and Julie Gordon, editing by Deepa Babington)